CANADA FX DEBT-C$ rockets to third day of gains on central bank optimism

Thu Apr 16, 2015 4:49pm EDT
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(Adds details, comments from CIBC, closing figures)
    * Canadian dollar at C$1.2181 or 82.10 U.S. cents
    * Bond prices lower across the maturity curve
    * C$ jumped about 3.4 percent, or more than 4 Canadian cents
in last three sessions

    By Solarina Ho
    TORONTO, April 16 (Reuters) - The Canadian dollar rallied
against the greenback for a third straight session on Thursday,
breaking key technical levels for the first time since January,
fueled by the Bank of Canada's more optimistic view of the
economy in the second half of the year.
    A broadly softer greenback, and conflict in Yemen that
pushed the price of crude, an important Canadian export, higher,
added to the loonie's strength.
    "It's going through all the little lines in the sand we've
put out there ... here we are at C$1.21 and change," said Don
Mikolich, executive director, foreign exchange sales at CIBC
World Markets.
    "I don't think the (Bank of Canada's) message was meant to
be a bullish one, but certainly less dovish and the market's
really taken it forward. (U.S.) oil prices here at $56 aren't
hurting ... We really had no other news today, so it's still the
pure reaction to the Bank of Canada."
    On Wednesday, the loonie powered to its strongest against
the U.S. dollar since the Bank of Canada's surprise interest
rate cut in January. 
    The Canadian dollar finished at C$1.2181 to the
greenback, or 82.10 U.S. cents, more than a cent stronger than
the Bank of Canada's official close of C$1.2300, or 81.30 U.S.
cents, on Wednesday. It has jumped some 3.4 percent, or more
than 4 Canadian cents since Monday.
    The currency, which had been trapped in a range of around
C$1.2350 to C$1.2850 since the January cut, traded between
C$1.2143 and C$1.2328 on Thursday.
    The U.S. dollar tumbled against a basket of major currencies
 after weak U.S. data and comments from the Federal
Reserve suggested a much anticipated interest rate hike will
likely come later in the year.  
    U.S. and Canadian inflation figures for March and Canadian
retail sales for February are among the key economic data due at
8:30 a.m. EDT on Friday. Some forecasters say the CPI could take
a back seat to retail sales in Canada, with inflation
expectations already addressed by Wednesday's central bank
statement on rates and its monetary policy report. 
    Canadian government bond prices were lower across the
maturity curve with the two-year price down 4.5
Canadian cents to yield 0.580 percent and the benchmark 10-year
 sliding 30 Canadian cents to yield 1.375 percent.
    The Canada-U.S. two-year bond spread was 9.6 basis points,
while the 10-year spread was -52.

 (Reporting by Solarina Ho; Editing by Peter Galloway and James